The Jet-Etihad deal signed today would help the foreign
carrier expand its footprint in India and turn Abu Dhabi into an alternative
hub (apart from Dubai) for Indians travelling to the US and Europe. However,
for domestic low-cost carriers and government-owned Air India, it would mean
more competition in domestic skies and loss of business in the international
market.
With a market share of only two per cent from India (compared with Emirates’ 13 per cent), Etihad runs 52 flights a week (compared to 185 Emirates flights) to ten cities in India. But that could change dramatically. An extended code-sharing agreement with Jet (now limited to only seven cities) in India would mean it could tap passengers seamlessly to fly to Abu Dhabi and to the US or Europe from 53 cities where Jet has services, virtually giving Etihad access to the entire country. At the moment, as part of the deal it has decided to extend their relationship to 23 cities.
According to a press release issued by the civil aviation ministry today, the ministry today enhanced air traffic rights between India and Abu Dhabi. L M Kapanaiah, India’s ambassador to the UAE, said the weekly number of seats between India and Abu Dhabi had been raised to 50,000 each over the next three years.
Most aviation experts say such a massive increase in capacity isn’t justified, as the market to Abu Dhabi isn’t expected to grow so fast from India suddenly. Etihad would benefit by securing access to fly directly to more Indian cities, increasing frequencies in existing cities from where it operates and feeding its hub from where passengers could fly further. Sources said it had sought the cap of seven weekly flights from Delhi and Mumbai be removed. It had also demanded flights from Goa, Pune and Amritsar. Clearly, this could pose a direct challenge to Dubai, the largest west Asian hub from where Indian passengers travel to the US and Europe, where Emirates has a monopoly.
Jet Airways would also benefit from the deal. It could offer an alternative route for Indian passengers to fly to other west Asian destinations, cities in Africa and the US, as well as Europe, apart from its hub in Brussels.
The airline could also leverage Etihad’s strong presence in Europe by bringing Indian passengers through Abu Dhabi. That is a win-win situation for both sides, as in Europe, Jet currently has flights only to Brussels, Milan and London on its own (through code-sharing agreements with Brussels Airlines and Thalys, it offers seamless connectivity to 14 additional cities). Etihad, however, has a huge network in Europe; it directly flies to 17 destinations and, through its elaborate code-sharing agreements with 13 airlines, offers seamless connectivity to 88 cities.
The India-North America market is one of the largest and most lucrative, in terms of business. Currently, Jet Airways flies only to Newark and Toronto and, through code-sharing agreements with United and Air Canada, offers connectivity to all key markets in North America. But Etihad could provide an alternative to Indian flyers — they could fly seamlessly from Abu Dhabi to Chicago, New York and Washington, apart from Toronto. And, through its code-share with American Airlines, it could allow Indians to fly all across the US.
In case the two synergise operations, it could lead to cost benefits. The two airlines could leverage their clout while buying fuel; they could also leverage their bargaining power with Boeing, as Etihad has just ordered 50 aircraft from the American company, most of which are Dreamliners, in association with Air Berlin. Most of the Jet Airways fleet is accounted for by Boeing aircraft. As such, the two could sign integrated deals in the future. Also, the two could pare costs by using each other’s ground operations at hubs. They could also integrate sales and distribution efforts, creating joint offices, general sales agents and single marketing teams at certain offline stations.
However, for Indian airlines, including low-cost carriers and Air India, the deal might not be good news. The alliance, analyst say, would have an adverse impact on Air India’s business in West Asia, the US and Europe. This was a key reason why the Indian government, until recently, was chary to opening up bilaterals in these routes, especially from Dubai, where the seat capacity is exhausted.
Domestic low-cost carriers say a code-sharing agreement between the two airlines in domestic skies to connect passengers to international destinations could have an adverse impact on their business. “About 15 per cent of the low-cost carrier domestic business comes from passengers flying onward to international destinations. With a code-share agreement between Jet and Etihad, these passengers would fly only Jet. We would lose business,” says a senior executive of a low-cost carrier.
He adds the Jet-Etihad alliance is bound to take away business from Emirates on the Indian-Dubai route. “Earlier, Emirates did not bother about right pricing in the India-Dubai sector, as most passengers were going onward — from Dubai to the US. However, now, with the new challenge, they are bound to drop fares on the India-Dubai sector, as they would have more seats to offer. And, this would have an impact on low-cost carriers that only fly point-to-point internationally. So, our fares would be under pressure,” he added.
With a market share of only two per cent from India (compared with Emirates’ 13 per cent), Etihad runs 52 flights a week (compared to 185 Emirates flights) to ten cities in India. But that could change dramatically. An extended code-sharing agreement with Jet (now limited to only seven cities) in India would mean it could tap passengers seamlessly to fly to Abu Dhabi and to the US or Europe from 53 cities where Jet has services, virtually giving Etihad access to the entire country. At the moment, as part of the deal it has decided to extend their relationship to 23 cities.
According to a press release issued by the civil aviation ministry today, the ministry today enhanced air traffic rights between India and Abu Dhabi. L M Kapanaiah, India’s ambassador to the UAE, said the weekly number of seats between India and Abu Dhabi had been raised to 50,000 each over the next three years.
Most aviation experts say such a massive increase in capacity isn’t justified, as the market to Abu Dhabi isn’t expected to grow so fast from India suddenly. Etihad would benefit by securing access to fly directly to more Indian cities, increasing frequencies in existing cities from where it operates and feeding its hub from where passengers could fly further. Sources said it had sought the cap of seven weekly flights from Delhi and Mumbai be removed. It had also demanded flights from Goa, Pune and Amritsar. Clearly, this could pose a direct challenge to Dubai, the largest west Asian hub from where Indian passengers travel to the US and Europe, where Emirates has a monopoly.
Jet Airways would also benefit from the deal. It could offer an alternative route for Indian passengers to fly to other west Asian destinations, cities in Africa and the US, as well as Europe, apart from its hub in Brussels.
The airline could also leverage Etihad’s strong presence in Europe by bringing Indian passengers through Abu Dhabi. That is a win-win situation for both sides, as in Europe, Jet currently has flights only to Brussels, Milan and London on its own (through code-sharing agreements with Brussels Airlines and Thalys, it offers seamless connectivity to 14 additional cities). Etihad, however, has a huge network in Europe; it directly flies to 17 destinations and, through its elaborate code-sharing agreements with 13 airlines, offers seamless connectivity to 88 cities.
The India-North America market is one of the largest and most lucrative, in terms of business. Currently, Jet Airways flies only to Newark and Toronto and, through code-sharing agreements with United and Air Canada, offers connectivity to all key markets in North America. But Etihad could provide an alternative to Indian flyers — they could fly seamlessly from Abu Dhabi to Chicago, New York and Washington, apart from Toronto. And, through its code-share with American Airlines, it could allow Indians to fly all across the US.
In case the two synergise operations, it could lead to cost benefits. The two airlines could leverage their clout while buying fuel; they could also leverage their bargaining power with Boeing, as Etihad has just ordered 50 aircraft from the American company, most of which are Dreamliners, in association with Air Berlin. Most of the Jet Airways fleet is accounted for by Boeing aircraft. As such, the two could sign integrated deals in the future. Also, the two could pare costs by using each other’s ground operations at hubs. They could also integrate sales and distribution efforts, creating joint offices, general sales agents and single marketing teams at certain offline stations.
However, for Indian airlines, including low-cost carriers and Air India, the deal might not be good news. The alliance, analyst say, would have an adverse impact on Air India’s business in West Asia, the US and Europe. This was a key reason why the Indian government, until recently, was chary to opening up bilaterals in these routes, especially from Dubai, where the seat capacity is exhausted.
Domestic low-cost carriers say a code-sharing agreement between the two airlines in domestic skies to connect passengers to international destinations could have an adverse impact on their business. “About 15 per cent of the low-cost carrier domestic business comes from passengers flying onward to international destinations. With a code-share agreement between Jet and Etihad, these passengers would fly only Jet. We would lose business,” says a senior executive of a low-cost carrier.
He adds the Jet-Etihad alliance is bound to take away business from Emirates on the Indian-Dubai route. “Earlier, Emirates did not bother about right pricing in the India-Dubai sector, as most passengers were going onward — from Dubai to the US. However, now, with the new challenge, they are bound to drop fares on the India-Dubai sector, as they would have more seats to offer. And, this would have an impact on low-cost carriers that only fly point-to-point internationally. So, our fares would be under pressure,” he added.
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